Designing a Budget

Preparing an accurate budget that reflects your values through saving & spending priorities is the first step to clarifying whether you are taking financial steps forwards or backwards!

**Please note that this Article is not to be taken as Financial Advice**

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Start with Accurate Figures

Before one can determine what personal budget figures can/should be, it is important to know exactly how and where you spend money, in detail! Avoid the guesswork and get down with the numbers. Begin keeping till slips and receipts for every purchase you make. If a receipt is not offered, jot down the number immediately so that the money spent is still accounted for. Don’t forget to add in ‘incidentals’ like coffee breaks or energy drinks, happy hour or parking fee’s. & be sure to include payments required to settle any debt as soon as possible.

Getting firm figures for at least three months of spending ought to give you a foundation to paint a realistic picture of where your money is going.

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Ultimate Budget Basics

Determine Monthly Income

“Income” is any money that you receive. Including but not limited too: paycheck amount after tax, scholarship pay-outs, allowance, inheritance, grants, or interest from savings accounts or investments*. Do not include possible incomes (ie. Lotto winnings), only amounts which you are sure of receiving.

Calculate Monthly Expenses

This step is crucially important. Resist the temptation to skip over any items in this step and count everything from the biggest amount to the smallest.

Begin with the larger tally’s such as rent/mortgage, car repayment, rates & utilities, school fees and the like. Divide yearly or quarterly sums to achieve the actual cost per month for budgeting purposes. Once large expenses are covered continue with all others. Including insurance policies, fuel/bus fares, groceries, personal items, airtime, and entertainment. Know how much each area of spending is requiring per month.

*Subtract Total Expenses from Monthly Income (# from Step 1)
Income – Expenses = Savings/Investment
OR Income – Set amount to Save = Amount left to work with

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Are you Over or Under?

Under?: If total monthly expenses are under your monthly income and you have money left over, congratulations! Now you can look closer at what you are spending the most on and decide if your spending is in line with your values and long-term goals. If you haven’t already taken advantage of a tax-free savings account or begun to invest, now is the time to start!

Over?: If monthly expenses over your monthly income are putting you in the red, don’t despair! This is exactly why you’ve gone through the effort to make a budget. Now that you have the numbers in front of you, it is possible to start identifying where you can cut back and save. Trimming down excess spending is vital to avoiding debt.

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Personalized Budgets

Once you know your income and expense totals you can choose to distribute money into budget categories. Decide where to spend or where to save based on long-term financial goals and improving your quality and enjoyment of life. A budget you can stick too, ensures that all your spending is accounted for and categorized in a way that makes sense to you.

Cost Cutting Tips: Shop around for insurances, understand loan terms and conditions before signing contracts, examine spending choices carefully. Stay away from comparing your lifestyle with someone else’s. Jostling to ‘keep up’ by spending more than you can afford is a financial decision sure to have unpleasant consequences in the long-run. Be sure to avoid scams such as pyramid schemes; if someone tells you that you can get more money by giving them money, understand that it is most likely a scam, a gamble or unnecessary risk.

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The High Cost of Credit
Putting extra expenses on credit cards or short-term personal loans can be a decision that makes you pay twice. Understanding interest rates can help you calculate exactly how much extra you pay for the price of buying on credit.* Be alert and get savvy with the small-print.
*It’s possible to avoid interest levies if one pays the full balance statement amounts monthly.

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Future Financial Wellness

Taking charge of your finances and choosing to budget wisely and save allows for sense of financial security & stability.

Savings add up and can build momentum to take you forward into a future full of your potential unleashed!

**Please note that this Article is not to be taken as Financial Advice**